Chinese Demand for Semiconductors to Fall, Analyst Warns

Chinese demand for semiconductors will fall nearly 6 percent this year, according to market analyst iSuppli, adding to the growing evidence that China's economy will not be a haven for companies seeking shelter from the economic crisis.

China's semiconductor market will shrink by 5.8 percent to US$72 billion, or more, in 2009, down from $76.5 billion in 2008, iSuppli said. Globally, the market analyst expects semiconductor sales to contract by 9.4 percent.

Looking ahead, iSuppli expects to see the Chinese semiconductor market resume growth in the future, with a forecast of 9 percent growth in 2010.

China isn't the only market that faces downturn in demand for chips. Intel, the world's largest chip makers, last week declined to release an earnings forecast for the first quarter, saying it had limited visibility into what customer demand will be like during the period.

In previous economic downturns, China was a market that semiconductor companies could count on for growth, even as markets elsewhere faltered. For example, following the dot-com crash of 2000, Chinese demand for chips grew by 24.4 percent, while global demand slumped by 28.6 percent, the firm said.

China's economy, which relies heavily on exports for growth, has shown itself to be more vulnerable to the current economic downturn than many expected. IDC this week announced that Asian PC shipments declined for the first time in ten years during the fourth quarter, citing weaker-than-expected demand from Chinese consumers as a principal reason.

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